Perhaps “Digital” is the most defining word of the 21st century. Due to a combination of the pandemic and technology, most companies and human relationships are now digital. So is Gold! Enter, Digital gold.
Digital gold is becoming one of the most efficient ways of investing in physical gold due to benefits like no making charges, security, assured purity, etc.
Let’s take a look at some facts about this investment and also see the benefits of digital gold. This will help you understand whether digital gold could be a good addition to your portfolio.
5 Facts About Digital Gold
1. Digital gold costs the same as physical gold
2. Physical and digital gold investments are taxed the same way
3. Digital gold investments can be used as collateral for an online loan
4. Digital gold can be converted into physical gold
5. GST applies to digital gold investments
3 Benefits Of A Digital Gold Investment
1. No making charges
Making charges can eat into your gold investment returns. This is where digital gold is different. If you’re an investor looking for long term returns from your gold investments and not to wear or physically own gold, digital gold could be the right investment for you.
2. Assured Purity
Digital gold by Safegold on the Cube Wealth app comes with assured purity. Your digital gold investments are backed by actual 24 Karat Gold that is 99.99% pure (9999 purity).
3. Safe & Secure
This is perhaps the most reassuring and important aspect of digital gold investments. The gold that you invest in is stored in a safe and secure vault backed by Brinks.
You can even withdraw the digital gold you invest in using Cube in the form of gold bars. Minting charges may apply but will be easy on the pocket compared to making charges.
Taxes on Digital Gold Investment Returns
Many people wonder how digital gold investments are taxed. The taxes on digital gold investment returns are divided into 2 types based on the holding period.
1. Short Term Capital Gains
If you want to sell your digital gold investment before 3 years, you’ll have to pay a Short Term Capital Gains (STCG) tax. The returns are added to your gross income. The tax rates will be according to your tax slab.
2. Long Term Capital Gains
You’ll have to pay a Long Term Capital Gains (LTCG) tax if you sell your digital gold investments after 3 years. The LTCG tax rate is 20% (+4% cess and any surcharge) with indexation benefits.
Historical data suggests that gold does well when the markets are down and corrects itself when the markets are on a high. This is why investors choose to buy gold to hedge against inflation and other market-related concerns.
But in general, gold is a valuable asset for the long term. Digital gold sidesteps the concerns associated with physical gold but carries the same benefits.
Shriram is a Consultant at CubeWealth. He has developed cutting edge IT products for over 2 years before turning to his passion for the written word. His love for philosophy, developing products, and empowering people through quality content is what got him to CubeWealth.
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